Living Wage in China - OESO-richtlijnen · Working Hours in China Lots of overtime By law overtime paid on weekdays, day-offs, and legal holidays Supposed to be at least 150%, 200%,

Living Wage in China

Electronics

October 27, 2015

COLLABORATION What is the Global Living Wage Coalition?

Global Living Wage Coalition: Who Are We?

With additional support from :

We commit to adopt a common definition of living wage and to apply a common methodology for setting living wage levels and for evaluating wages and other forms of remuneration against those levels.

We commit to applying all functions of our organizations towards the long term goal of improving wages.

We commit to seeking support from brands, buyers, and retailers to make wage growth at the primary production level possible.

We commit to working together and working with the relevant stakeholders in these processes.

METHODOLOGY Anker Methodology of Calculating Living Wages

What is a Living Wage?

Living wage is the remuneration received for a standard work week by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family. Elements of a decent standard of living include food, water, housing, education, health care, transport, clothing, and other essential needs, including provision for unexpected events.

Elements of a decent standard of living include:

food,

water,

housing,

education,

health care,

transport,

clothing, and

other essential needs including provision for unexpected events

Important note: •living wage is based on costs in a particular location – not sector specific. •Paying a living wage won’t guarantee decent standard of living for all families – only for an ‘average’ family.

• Cost of nutritious low cost diet

• Cost of basic acceptable housing

• Cost of other essential needs

• Provision for unexpected Events

Cost of basic but decent life for reference

size family

• Family size to support

• Number of full size worker equivalents per family

Net living wage for workers

• Payroll Taxes and Deductions

Gross living wage for workers

Cost of Decent Standard of Living

PREVAILING WAGES Seeing the Gap

What are current wage levels?

Cash versus in-kind

Bonuses

Payment by task, day, month

Different wages for different workers

Trickier to calculate than you would think!

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CALCULATION Electronics Industry Living Wage

Living Wage Studies

› Shenzhen

› Zhengzhou

› Chengdu

› Shanghai

› Suzhou

› Hangzhou

Six City Study

Living Wage – Location Specific, Not Industry Specific

Location of Studies - Shenzhen

Housing Standard - Schenzhen

• building in reasonable condition; • cement or tile floor in reasonable condition; • cement walls with cement base; • durable roof of zinc or cement without leaks;

ceiling at least 2.2 meters at lowest point; • sufficient number of windows for adequate lighting and ventilation (preferably 1 window per room); • electricity; • piped water inside house; • flush toilet inside house; • at least 4 rooms (living room, bedroom, kitchen, bathroom); • at least 50 square meters of floor space or 40 square meters of living space;

• building located in reasonable distance (not too far away from specified industrial park).

According to UN-HABITAT (2007) housing requires at least 2 potential sleeping rooms (e.g. at least 1 bedroom and 1 living room) for a 4 people household to avoid being considered as overcrowded. And in Shenzhen, it is basic to have bathroom inside house.

PREVAILING WAGE- THE GAP Electronics Industry Living Wage

Working Hours in China

Lots of overtime

By law overtime paid on weekdays, day-offs, and legal holidays

Supposed to be at least 150%, 200%, and 300% of hourly/daily wages respectively.

Researchers interviewed workers and found that most overtime is on weekdays at 150%.

Example: If work overtime 2 hours per day – overtime would increase pay by 37.5% and make up 27% of pay.

Therefore possible (maybe even likely) for prevailing wage including overtime to be similar to living wage, and at the same time to have a big gap between living wage and prevailing wage earned during normal working hours.

A common approach to measuring current wages

E.g. identifying and valuing in-kind benefits provided as part of the employment package

› Is it for the worker’s personal benefit?

› Can the worker count on receiving the benefit?

› Does it meet standards of decency?

› Does it help meet basic needs today?

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In-Kind Benefits in China

Minimum wage in China needs to be paid in cash – so in kind benefits do not count towards minimum wage in China.

In-kind benefits vary from factory to factory.

Common in kind benefits found in electronics in China ›Meals provided at factory. Workers often pay for this at a price that might or might not be below market rate but above cost of meal prepared at home.

›Dormitory utilities allowance (e.g. free utilities if within a budget cap)

›Dormitories provided at factory. Workers often pay for these at a price that might or might not be below market rate

›On-site health clinics for workers only. This has limited value.

›Subsidies for worker-paid social insurance contributions (usually only for migrants which is a substitute for free health services available for residents)

›Free shuttle busses to dormitories and activities in some factories.

IMPLEMENTATION AND CHALLENGES

Electronics Industry Living Wage

Migrant Labour

Many migrant workers in manufacturing factories in China.

Anker methodology assumes that families can afford to live together for decency – if they live apart it should be by choice – not economic necessity

Migration of the whole family to the city especially to elite cities in China is made more difficult by the Hukuo system – where migrants lose their rights to land and social services if they move to the city

Electronics in India. Courtesy Social Accountability International

Thank You!

Global Living Wage Coalition Contact: Michelle Bhattacharyya [email protected]

Cooperative in Palestine ©Simon Rawles, Fairtrade

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